Money supply rises faster yet deflation remains the concern

Too many wrongly assume  inflation and rising rates

This naive assumption is made when too much money is printed and the monetary base expands rapidly.  Money velocity is weak in this debt loaded disinflationary economy and without the 2009 massive central bank money creation help deflation would have occurred.

Each time the economy slows during this post 2008 economic recovery money supply accelerates and money growth slows as the economy expands. Should a strong economy finally arrive and send rates much higher the Federal Reserve will keep inflation in check by unloading Trillions of Bonds raising rates rapidly to cool the economy.

Long Term there remains a demographic and political entitlement debt tsunami that will create panic during the next economic recession, but our economy appears to have until 2016 to 2019 to reach normal overbought conditions with a flatter to inverted yield curve. Prior to this worrisome stage much higher wage inflation and consumer confidence will occur.

That is when we would expect interest rates to top out as the Bond Bubble will have been thoroughly deflated and ready to be replaced by the stock market Bubble.

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